Strengthening Smallholder Agribusiness Competitiveness through Value Chain Management Strategy: Evidence from North Sumatra, Indonesia

Abstract

The competitiveness of smallholder agribusiness enterprises is strongly determined by managerial capability and by value chain management strategies that adaptively integrate business actors, market information, and market orientation. Prior studies have tended to examine value chain strategy descriptively, without testing the mechanisms through which such strategies are translated into competitive advantage. This study develops and empirically tests a conceptual model linking Value Chain Management Strategy (VCMS) to Agribusiness Competitiveness (AC), with Managerial Capability (MC) as a mediator and Market Orientation (MO) as a moderator. The study employed a quantitative explanatory design using a cross-sectional survey of 182 smallholder sheep-fattening agribusiness actors in Langkat Regency, North Sumatra, selected through multistage stratified random sampling. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings show that VCMS exerted a significant positive direct effect on both MC and AC, that MC partially mediated the effect of VCMS on AC, and that MO significantly and positively moderated the VCMS–AC relationship, strengthening the effect of VCMS on competitiveness among enterprises with higher market orientation. These findings reinforce the dynamic capability perspective within the smallholder agribusiness context and offer practical implications for business actors, facilitating institutions, and policymakers in designing value chain-based competitiveness interventions.